Germany is on track for firm surge

16:17 24.09.2018

In September, business morale stood still in Germany, underpinned by construction and consumer spending, as a poll revealed. It has left the European country on track for further surge even if an uncertain global economic outlook dampens.

On Monday, the Munich-based Ifo economic institute's business climate index dived to 103.7 from August’s upwardly updated 103.9. It surpassed a Reuters consensus estimate of about 103.2.

Notwithstanding soaring uncertainty, Germany’s economy is still firm, as market experts point to improved retailing as well as building.

However, the manufacturing sub-index slumped and German businesses scaled back their hopes a bit, dropping a hint at a soaring trade conflict between China and America that affects exporters.

The surge outlook is also overshadowed by an impasse in the UK’s talks with its EU partners over the conditions of its scheduled departure from the EU next March. Notwithstanding the upbeat mood, uncertainty is gradually strengthening among companies.

Some experts are assured that the German economy will most probably leap by up to 2% in 2018. It would be less than both the government's estimate of 2.3% as well as the calendar-updated surge rate of 2.5% hit in 2017.

As momentum in exports speeds down, construction and household spending have become extremely crucial drivers for Europe's biggest economy.

Unemployment is at record minimums and German customers are deriving the benefits of soaring real wages as well as cheap credit because of the euro zone's expansive monetary policy.

According to the Ifo poll, business sentiment strengthened in all sectors, except manufacturing.

Financial analysts generally consider the current business situation to be a bit less favorable than in it was August, although the sub-index kept to a relatively high level.

Other experts told that the uncertainty provoked by the US-China trade clash was affecting demand for German industrial products.

On Tuesday, the euro tacked on because market participants waited for reports on inflation and growth in the euro zone, while the Japanese yen went down after Japan’s major bank told it would be more flexible in its huge stimulus program…

On Tuesday, the evergreen buck dived because the common currency bounced off and the UK pound managed to ascend to the day’s maximums reacting to reports that British Prime Minister Theresa May is going to take control of Brexit talks…